Superannuation Tax & Salary Sacrifice in 2026-27: The Numbers That Matter
salary sacrifice super Superannuation is Australia’s biggest tax concession hiding in plain sight. Money you salary sacrifice into super gets taxed at 15% instead of your marginal rate — which, for most full-time workers, means an instant, risk-free return of 15 to 30 cents on every dollar, before a cent of investment growth.
But the rules have edges. The concessional contributions cap just rose to $32,500 for 2026-27, the Division 293 threshold hasn’t moved in nearly a decade, and exceeding the cap triggers a paperwork headache you’d rather avoid. This guide covers how super is taxed, how salary sacrifice actually works with real numbers, and the traps to watch.
Quick answer: Salary sacrifice lets you contribute pre-tax salary to super, where it’s taxed at 15% (instead of your marginal rate of up to 45%). For 2026-27 the concessional cap — covering super guarantee, salary sacrifice and deductible personal contributions combined — is $32,500. If your income plus concessional contributions exceed $250,000, Division 293 adds another 15% tax on the excess.
salary sacrifice super super contributions are taxed
There are two doors into your super fund, and the tax treatment is completely different:
| Contribution type | Examples | Tax |
|---|---|---|
| Concessional (pre-tax) | Super guarantee, salary sacrifice, personal deductible contributions | 15% in the fund |
| Non-concessional (after-tax) | Personal contributions you’ve already paid tax on | 0% on entry |
The concessional cap for 2026-27 is $32,500 — and it covers everything concessional combined: your employer’s super guarantee, any salary sacrifice, and any personal contributions you claim as a tax deduction. It’s one bucket, not three.
The non-concessional cap is $130,000 for 2026-27 (with a $390,000 three-year bring-forward available if you’re under 75 and meet the balance tests). Non-concessional contributions don’t give you a tax deduction, but the earnings inside super are still taxed at the concessional 15% fund rate rather than your marginal rate.
Salary sacrifice: the maths
Here’s what actually happens to $10,000 of salary for someone earning $120,000 in 2026-27 (marginal rate 30% + 2% Medicare levy):
Option A: Take it as salary
$10,000 taxed at 32% (30% + 2% Medicare) = $3,200 tax
In your pocket: $6,800
Option B: Salary sacrifice into super
$10,000 taxed at 15% in the fund = $1,500 tax
In your super: $8,500
Same $10,000 of earnings. Option B leaves you $1,700 better off — money that then compounds in a 15%-taxed environment for the rest of your working life. The higher your marginal rate, the bigger the win: at the 45% top rate, the saving is $3,000 per $10,000 sacrificed.
There’s a second, subtler benefit. Salary sacrifice reduces your taxable income, which can also reduce your Medicare levy surcharge exposure, HELP repayment rate, and Division 293 liability. It’s one of the few levers that moves several tax dials at once.
Salary sacrifice vs personal deductible contributions
They end up in nearly the same place tax-wise, but the mechanics differ:
| Salary sacrifice | Personal deductible contribution | |
|---|---|---|
| How | Employer agreement, taken from pre-tax pay | You contribute, claim deduction at tax time |
| Timing | Each pay cycle | Anytime before 30 June (fund must receive it) |
| Notice | Set up with payroll | Section 290-170 notice to your fund |
| Flexibility | Fixed arrangement | Lump sums whenever you like |
| SG interaction | Check your agreement — some employers calculate SG on the reduced salary | No interaction |
The personal deductible route is a lifesaver for the self-employed (no employer to sacrifice through) and for anyone who gets a windfall late in June — a bonus, a capital gain from a property sale — and wants to offset it before year-end. Just remember the fund must physically receive the money by 30 June, and you must lodge the deduction notice. Miss either and the deduction fails.
The $32,500 cap: what counts and what happens if you breach it
Everything concessional counts toward the one cap:
- Super guarantee (12% of your ordinary earnings in 2026-27)
- Salary sacrifice amounts
- Personal deductible contributions
- Certain other amounts (e.g. some fund expenses allocated to you)
How much room do you actually have? On a $100,000 salary, SG alone is $12,000 — leaving $20,500 of headroom for salary sacrifice. On $200,000, SG is $24,000, leaving $8,500. On $270,000+, SG hits the maximum contribution base ($270,830 for 2026-27, now calculated annually rather than quarterly) — roughly $32,500 — leaving essentially no room.
Exceed the cap and the ATO adds the excess to your assessable income (taxed at your marginal rate), gives you a 15% tax offset for the contributions tax already paid, and lets you elect to withdraw the excess. It’s not catastrophic, but it’s messy — and entirely avoidable by checking your year-to-date contributions in myGov before June.
Carry-forward: the little-known top-up. If your total super balance was under $500,000 at the previous 30 June, you can use unused concessional cap amounts from the last five years. Someone who barely contributed in 2021-22 could have tens of thousands in unused cap space waiting. This is especially powerful in a year with a large capital gain — a big deductible contribution can offset the spike.
Division 293: the extra 15% nobody warns you about
Division 293 is an additional 15% tax on concessional contributions for high-income earners. The threshold is $250,000 — and it hasn’t moved since 2017-18. It’s not indexed, while everything around it (the cap, SG, wages) has grown. More people trip over it every year.
The test: income + concessional contributions > $250,000. “Income” here is broadly defined (it includes reportable fringe benefits and total net investment losses, among other things — it’s wider than plain taxable income).
The tax applies to the lesser of (a) the amount by which you’re over $250,000, and (b) your concessional contributions.
Worked example. Rachel earns $260,000 and her employer contributes $20,000 in SG.
- Income + contributions = $280,000 → $30,000 over the threshold
- Lesser of $30,000 (excess) and $20,000 (contributions) = $20,000
- Division 293 tax: $20,000 × 15% = $3,000 extra
Her super contributions are effectively taxed at 30% (15% + 15%) instead of 15%. Still better than her 45% marginal rate — but the advantage has halved, and she needs to know the bill is coming because the ATO assesses it after lodgment.
The sharp edge: at 12% SG, salary plus super alone reaches $250,000 at around $223,000 of salary. No salary sacrifice needed. If you earn anywhere near that, check your Division 293 position before adding voluntary contributions — they may just attract the extra tax.
Frequently asked questions
Is salary sacrifice worth it on a low income?
Honestly, barely. In 2026-27 the second tax bracket is 15% — exactly the same as the super contributions tax. Below about $45,000 of taxable income, salary sacrifice saves you little or nothing. The real wins start at the 30% bracket and grow from there.
Can I salary sacrifice if I’m self-employed?
Not technically — there’s no employer. But personal deductible contributions achieve almost the same result: contribute from after-tax money, claim the deduction, and the fund taxes it at 15%.
What happens to salary sacrificed money — can I access it?
No. It becomes preserved super, locked away until a condition of release (usually retirement after preservation age). Don’t sacrifice money you might need.
Does salary sacrifice reduce my employer’s SG obligation?
It shouldn’t, if your agreement is set up correctly — but check. Some older agreements calculate the 12% SG on your reduced (post-sacrifice) salary, which quietly costs you. Modern awards and many agreements require SG on the pre-sacrifice amount. Confirm with payroll.
How do I claim a tax deduction for personal super contributions?
Contribute to your fund, then lodge a section 290-170 notice with the fund (most funds have a form), and claim the deduction in your tax return. The fund must receive the contribution by 30 June and acknowledge your notice.
Should I worry about Division 293?
If your income plus super contributions are anywhere near $250,000, yes — model it before making extra concessional contributions, because the extra 15% can erase much of the benefit.
The bottom line
For 2026-27, the super tax picture is: 15% on concessional contributions up to a $32,500 cap, an extra 15% via Division 293 above $250,000 of income-plus-contributions, and a salary sacrifice advantage that grows with your marginal rate. For a mid-career professional on $120,000, sacrificing $10,000 a year is worth roughly $1,700 annually in pure tax arbitrage — before compounding does its work.
Model your own numbers with our free super calculator, and if a property sale or bonus is pushing this year’s income up, see what our CGT calculator says about pairing it with a deductible contribution.
